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815 CMR 2.00:STATE GRANTS, FEDERAL GRANT AWARDS, FEDERAL SUBGRANTS AND SUBSIDIES

This is an unofficial version of this regulation. The official version of this regulation on file with the Secretary of State Regulations Division will control in the event of any discrepancy with the information contained in this document.

Please contact the Regulations Division to obtain an official version of these regulations at:

Telephone: (617) 727-2831 Fax: (617) 742-4822 or Email:.

815 CMR 2.00:STATEGRANTS, FEDERAL GRANT AWARDS, FEDERAL SUBGRANTS AND SUBSIDIES

Section

2.01:Purpose, Application, and Authority

2.02:Definitions

2.03:Subsidy Disbursements

2.04:Applying for and Receiving Federal Grant Awards

2.05:Grant Disbursements

2.06:Contractual Requirements for Grants

2.07:Reporting Requirements for Grants and Subsidies

2.08:Records Management

2.09:Severability

2.01:Purpose, Application and Authority

(1)Purpose. 815CMR 2.00 establishes rules and procedures to assist departments with the administration of Grants and Subsidies.

(2)Application. 815 CMR 2.00 applies to all StateDepartments that administer Grants and Subsidies, including agencies, subdivisions, offices, boards, commissions or institutions of the Executive Department, including the Institutions of Higher Education, the Judicial and Legislative Branches and the Constitutional Offices. 815 CMR 6.00 governs Interdepartmental business between two or more State departments. 801 CMR 21.00 governs procurements and expenditures for commodities and services, including human and social services, including Department purchases of goods or services needed to carry out a project or program under a Federal Grant Award. The Office of the Comptroller will interpret 815 CMR 2.00 and take any actions necessary to carry out the purposes of 815 CMR 2.00, including issuing additional policies, procedures and forms for Department use.

(3)Authority. 815 CMR 2.00 is issued pursuant to M.G.L. c.7A, §7, § 8, § 9, § 12, § 15; St. 1986, c.206, §17, and c. 29, § 6B.

2.02:Definitions

Allotment. That portion of an appropriation that may be spent by a Department for a specified period as determined by the governor and the secretary of administration and finance under M.G.L. c. 29, § 9B.

Cash Management Improvement Act (CMIA). The Cash Management Improvement Act of 1990 (CMIA) provides rules and procedures for the efficient transfer of federal financial assistance between the various federal agencies and the State pursuant to implementing regulations in 31 CFR (Code of Federal Regulations) Part 205. The State, through the Office of the Comptroller, annually enters into a Treasury State Agreement (TSA)with the U.S. Department of the Treasury to set forth terms and conditions for the State’s implementation of CMIA. The Comptroller shall prescribe the requirements under State finance law for State Departments to comply with the TSA and CMIA.

Cost Allocation Plan. A federally approved proposal for determining both directand indirect costs applicable to Federal cost-based awards to governmental units.

Department. Also referred to as StateAgency. As defined by M.G.L. c. 29, § 1, a legal entity of State government established by the General Court as an agency, board, bureau, agency, office or division of the commonwealth with a specific mission, which may either report to cabinet-level units of government, known as executive offices or secretariats, or be independent divisions or departments. StateDepartments will process Grant payments through MMARS.

Department Head. Also known as Agency Head, the administrative head of a StateDepartment, agency, board, bureau, office or division of the commonwealth who has been authorized through legislation to obligate and expend funds, comply with legislative mandates and make any certifications or approvals required under this chapter or other State or federal laws or regulations requiring an agency head certification or approval.

DUNS Number. A national Data Universal Numbering System used as a means of identifying business entities on a location specific-basis. The DUNS was incorporated into the Federal Acquisition Regulation (FAR) in April 1998 as the Federal Government's contractor identification code for all procurement-related activities. All StateDepartments are also required to have a DUNS number in order to apply for, receive, and report on a Federal Grant Award. Subrecipients of Federal Grant Awards are required to obtain a DUNS number which is recorded as part of the vendor code for the Subrecipient on MMARS.

Executive Office for Administration and Finance (ANF). The Executive Office established by M.G.L. c. 7.

Federal Grant Application. A document distributed by a Federal Department or Federal Agency administering a Federal Grant Award program which is used to determine eligibility of a proposed State Department recipient of a Federal Grant Award.

Federal Grant Award. As defined in M.G.L. c. 29, s. 1, a Federal Grant is any financial assistance available to a StateDepartment from the United States government, either directly or through an intermediary, including a project, formula, or block grant, a subvention, a subsidy, an augmentation or a State plan but excluding federal reimbursements. The Federal Grant Award is a document distributed by a by a Federal Department or Federal Agency administering a Federal Grant program which is used to notify a State Department of the award of a Federal Grant. A copy of the Federal Grant Award must be provided to the Office of the Comptroller to establish the Federal Grant Award in MMARS prior to activity under any Federal Subgrant.

Federal Grantee. A State Department that has applied for and received a Federal Grant Award. State Departments receiving Federal Grant Awards become a Grantor when disbursing Federal Grant Awards as Federal Subgrants to Grantees.

Federal Grantor. The Federal Department or Federal Agency administering aFederal Grant award or cooperative agreement with a State Department in accordance with 2 CFR (Code of Federal Regulations) Chapter I, Chapter II, Part 200, et al.

Federal Reimbursement. Financial assistance provided under Titles XVIII or XIX of the Social Security Act or other reimbursements received for State entitlement expenditures and credited to the General Fund, or other federal financial assistance from the United States government for direct payments to individuals, or for other purposes as provided for in section 2ZZZ, section 34 of chapter 90, chapter 92 and section 48 of chapter 151A.

Federal Subgrant. A Grant of Federal Funds received by a State Department as a Federal Grantee, which are provided under contractual terms to a Grantee. Certain Grantees receiving Federal Grant Award funds will be considered Subrecipients and will be required to comply with additional federal requirements.

Grant. Discretionary and non-discretionary (earmarked) funds of State or Federal Grant Awards which are considered financial assistance provided under contractual terms between a Grantor StateDepartment and a Grantee to assist the Grantee in the achievement or continuation of a specified public purpose to benefit the general public or a segment of the general public consistent with the Grantor Department's Legislative Authorization and the terms of the Grant funding. A Grant of a Federal Grant Award is also known as a Federal Subgrant.

Grant Application. A document distributed by a State Department which is used to determine eligibility of a proposed Grant recipient of discretionary funds.

Grantee. A public or non-Public Entity selected as a recipient of Grant. Grantees receiving Federal Grant Awards through a Federal Subgrant who are deemed Subrecipients for Federal Grant Award purposes will be required to comply with applicable federal requirements, including but not limited to Subrecipient audit requirements. Contractors that do not meet the definition of Subrecipients that are paid using Federal Grant funds to provide goods or services to support a Federal Grant program or project are not considered Grantees and are not covered under this regulation. Department purchases of goods or services needed to carry out a project or program under a Federal Grant Award are governed by 801 CMR 21.00 or other applicable regulation for the provision of goods and services.

Grantor. The State Department administering a Grant or Subsidy in accordance with Legislative Authority or the terms of the Grant or Subsidy funding. Grantors include any Executive Office, Department, Agency, Office, Division, Board, Commission or Institution within the Executive Branch excluding the Legislative Branch, Judicial Branch, Constitutional Offices, Elected Offices, Public Institutions of Higher Education, the Military Division and Independent Public Authorities. A State Department that provides a Federal Grant Award through a Federal Subgrant under contract to a Subrecipient Grantee to carry out part of a Federal Grant Award may also be referred to as a “Federal Grantee” as well as a “pass-through entity”, meaning that the federal requirements under the Federal Grant Award are passed through to the Subrecipient and both the State Department Grantor and the Subrecipient are responsible for compliance.

Incidental Grant. A one-time Grant with a total dollar value that does not exceed the amount established by the Office of the Comptroller.

Interdepartmental Service Agreement. 815 CMR 6.00 governs interdepartmental fiscal business including Interdepartmental Service Agreements (ISAs). Interdepartmental Service Agreements (ISAs) are non-chargeback business relationships between state departments that are evidenced by an Interdepartmental Service Agreement (ISA) Form.

MMARS. The State accounting system known as the Massachusetts Management Accounting and Reporting System. All StateGrants, Federal Grant Awards. Federal Subgrants and Subsidies administered by State Departments will be processed through MMARS.

Legislative Authorization.StateGeneral and special laws including statutes and annual appropriation acts.

Office of the Comptroller (CTR). The Department established pursuant to M.G.L. c. 7A charged with prescribing the methods and procedures for compliance with State finance law including the disbursement of Grants and Subsidies.

Public Entity. A unit of State or local government including a county, municipality, local public authority, school district, special district, district commission, regional government, any agency or instrumentality of government, and State authorities as defined in M.G.L. c.29, §1. The Office of the Comptroller identifies Public Entities in the MMARS vendor file (VEND) with a "G" in the classification field.

State. The Commonwealth of Massachusetts.

SEFA. The Schedule of Expenditure of Federal Awards (SEFA) financial report provided annually by the Statethrough the Office of the Comptroller to report to the federal government summarized by CFDA number the federal grant awards received by the State and the amount expended each fiscal year.

Subrecipient. A Grantee that receives a Federal Subgrant from a Grantor (also known as a“pass-through entity”) to carry out part of a Federal Grant Award. Grantees receiving Federal Grant Awards who are deemed “Subrecipients” for Federal Grant Award purposes will be required to comply with applicable federal requirements, including but not limited to Subrecipient audit requirements under the Code of Federal Regulations, including 2 CFR Chapter I, Chapter II, Part 200 et al.

Subsidy. Non-discretionary funds appropriated by the StateLegislature to be made either as a direct payment, a transfer of a specified amount to a designated recipient entity, or are designated specifically as "Subsidies" or a "Subsidy program",and are not specified as a “Grant”, “contract” or “for a program”. Subsidies are considered non-discretionary (earmarked) and the State Department has no discretion in disbursement. Loan programs, formula grants, or other programs of financial assistance which provide discretion in disbursementwith respect to recipients or amounts will not be considered Subsidies. Subsidies are exempt from competitive procurement, competitive grant application requirements and standard contract requirements. Subsidies are documented using a Subsidy Agreement as supporting backup for audit purposes.

Subsidy Agreement. A form prescribed by the Office of the Comptroller that is used by Departments as the supporting backup documentation for audit purposes when making Subsidy payments.

TSA- Treasury State Agreement (TSA). outlines by CFDA the funding technique and the clearance pattern the State will use to draw down funds from the federal government. Generally, conformance with the TSA assures that the State does not owe the federal government, or is not due from the federal government, interest liability on its drawdowns. The State must enter into a TSA with the US Department of the Treasury to set forth terms and conditions for implementing CMIA.

VCUST. The Vendor Table in the State accounting system MMARS. All Grantees must be registered as vendors in VCUST in order to receive Grant or Subsidy payments. Subrecipients of Federal Grant Awards are required to provide a DUNS number to be recorded in VCUSTunder headquarters in order to be paid.

2.03: Subsidies

(1)In order to make a payment as a Subsidy, a Department must have specific Legislative Authorization that mandates:

(a)a direct, non-discretionary (earmarked) “payment” or “transfer” of a specified amount of State Funds to a specifically named recipient entity; or

(b)directs payments to be made as "Subsidies" or as a "Subsidy program" to a specifically named group of recipients or class of recipients.

(2)A Subsidy shall not include a Legislatively Authorized amount of funds to be expended for or on behalf of a specified entity that is designated to be made as a “Grant”, “contract” or “for a program”. Legislative Authorization that designates a specified amount of funds, or an amount “not to exceed” a specified amount, to be expended for or on behalf of designated entity, but does not clearly specify that the amount is to be made as a direct “payment” or a “transfer” shall be interpreted to be either a “Grant” or a “contract” that has been exempted from competitive procurement requirements. These expenditures shall be made in accordance with relevant applicable general and special laws and regulations for a Grant or contract.

(3)The Department and Subsidy Recipients must execute a Subsidy Agreement as prescribed by the Comptroller containing the amount of the Subsidy and the payment schedule for installments, consistent with cash flow and Allotment availability.

(4)A Subsidy Agreement reserves the State’s right to require the Subsidy Recipient to report on how the funds were expended consistent with the public purpose of the Subsidy Legislative Authorization for audit purposes.

2.04:Applying for and Receiving Federal Grant Awards

(1)Applying for Federal Grant Awards:

1. As required by M.G.L. c. 29, §6B, State Departments must provide notice of any application for Federal Grant Awardsas prescribed by CTR, in consultation with ANF, to comply with quarterly reporting requirements to the house and senate ways and means committees on ways and means on the status of Federal Grant Awards applied for.
2. State Departments must provide any relevant information related to the proposed application, as prescribed by CTR, which may include, but is not limited to:
3. The State Department DUNS number under which the Department will be applying for the Federal Grant Award,
4. The Federal Grantor agency to which the Federal Grant Application is being made;
5. a reference to the federal statutory authority under which the Federal Grant Application for the Federal Grant Award is made;
6. a description of the substance of the Federal Grant Award sought;
7. a fiscal Statement of the Federal Grant Award proposed budget;
8. the number of personnel, if any, to be funded from the Federal Grant Award;
9. any matching in-kind or other monies required to be committed, and when these matching in-kind or other monies will need to be available or expended in order to receive the Federal Grant Awards;
10. the Federal Grant Award terms;
11. the anticipated duration of the Federal Grant Award.

(2)Receipt of Federal Grant Awards

1. Upon receipt of the official notification of approval of a State plan or federal funds application, State Departments must provide notice as prescribed by CTRtocomply with the quarterly reporting requirements to the house and senate ways and means committees on ways and means on the status of federal funds received.
2. State Departments must provide to CTR a copy of the official notification and any other relevant information related to the receipt of the federal funds including the amount, duration, payments schedule and other attendant financial terms and conditions.
3. ANF shall include all Federal Grant Awards received or anticipated by State Departments as part of the annual budget.
4. No State Department shall establish new or expand existing programs involvingfederal or other non-State monies beyond the scope of those already establish, recognized and approved by the General Court, until the program and the projected amount of actual availability is submitted to the budget director for recommendation to the general court.
5. No State Department may make expenditures from any federal grant award or cooperating agreement unless such expenditures are made under specific appropriations of the general court and allotment thereof, said allotment be made by the comptroller upon receipt of Federal Grant Awards in accordance with State finance law, the Cash Management Act (CMIA) per the terms of the Treasury State Agreement (TSA), federally approved cost allocation plans (indirect & central), or other applicable requirements.
6. The comptroller shall not allow expenditures for the payment of salaries to be made from any federal grant account for which the comptroller has not been authorized to charge the full amount of fringe benefits to the account.

(3)Exceptions. The following exceptions shall be exempted from provisions of2.04 (1) and (2) c. i and ii.:

1. Federal Grant Awards coming to institutions of higher education, including research grants;
2. Research grants to individuals, agencies or institutions not exceeding $50,000 in annual amount and not creating new, or expanding existing program or commitments of State resources’
3. Any incidental Federal Grant Awards not exceeding $5,000 in annual amount:
4. Federal Grant Awards made available to the State for costs and claims resulting from natural disasters, civil disobedience or other occurrences of sufficient severity to have occasion and declaration by the governor of a State of emergency.

(4)Interdepartmental Service Agreements. State Departments disbursing Federal Grant Award Funds through an ISA to another State Department are required to comply with 815 CMR 6.00 and policies and procedures issued by the Office of the Comptroller related to expenditures of federal funds, including personnel.

2.05:Grant Disbursement

Grants must comply with the following conditions:

(1)A State Department that has been awarded a Federal Grant Award should expend the funds within the time allotted in the Federal Grant Award language. Exceptions to spend before or beyond the dates specified within the federal grant award language should be approved and substantiated by the federal grantor of the federal grant award.